Infrastructure is not the answer

September 9, 2010

Read Matt Bai of the New York Times and you will know the consensus of the center-right elites of the democratic party. In a typically thoughtless piece, he addresses the need for long term infrastructure investments as a way to help workers in our new non-industrial age. He successfully re-states a tired conventional wisdom that is utterly useless in addressing the deep issues confronting the American worker. Infrastructure spending can provide jobs today and, depending on how it’s spent, may provide comforts in the future (perhaps trains, etc), but it’s highly unlikely to provide long term worker benefits after the spending has ended.

Bai begins by correctly observing a long term trend in which “the United States was slowly moving away from the industrial age and into a digitized and globally competitive world, and that transformation was threatening to displace the middle class…”. What this trend is doing to the larger lower class he doesn’t say. “Thoughtful” liberals, he notes, sought to distinguish “between basic domestic spending, much of which goes to sustain less affluent and older Americans day to day, and the kind of public investments that might give future workers better access to the new economy.”

If Bai expanded on the meaning of the sterile and vaguely optimistic phrase “digitized and globally competitive world”, it would become clear his proposed remedies are utter nonsense. Over the past decades, great advances in technology have vastly expanded productivity thereby reducing the number of workers needed for any particular function. Most of the new technology was specifically created in order to reduce labor costs. Bai’s term ‘digitized’ should therefore be seen as a synonym for job cutting technology. Technology is not the only problem for the worker. Bai’s “globally competitive world” is treated as if it’s a force of nature and not the top US foreign policy goal since at least World War II. It’s largely a political creation of the American elite. This “globally competitive world” hits the worker at two levels: first, economies of scale become ever more important thus encouraging vast conglomerations, consolidations, and management efficiencies. Each have the effect of reducing the demand for jobs. Second, workers are forced into competing against foreigners earning just pennies on the hour. The “digitized and globally competitive world” is, in other words, a totally rigged game.

Bai’s, and by inference the elite democrats’, solution to this fundamental problem consists of this: “Retooling the education system, installing universal broadband, (and) upgrading rail lines and electrical grids”. Come on, let’s laugh – isn’t it funny? But this is the cage we’re in. As long as radical change is off the table, as long as the rules of the game are fixed, nothing of substance is possible. All these items are worthwhile in and of themselves but they will be utterly useless in helping workers compete in the “digitized and globally competitive world”. Education is a particularly prominent subject but note that no one gets specific – what type of education? More physicists? More engineers? More plumbers? More teachers? Almost every profession is already struggling with declining income and living standards; increasing their number is more likely to reduce real wages than bring us a renaissance economy. The reality is that the “digitized” world is making the average job less technical since everything is automated. High technology paradoxically reduces the need for mass technological knowledge.

We need to have an informed debate about the rules of the game and stop this nonsense of proposing strategies which will do nothing for the average American who is forced to play in this rigged contest.